Hungarian Online Licensing Unlawful

Business News

Hungarian legislation on granting concessions for casinos and related organisations of online games are not compatible with EU law, the EU Court of Justice ruled on February 28, which will effectively bar operators of games of chance established in another Member State from having access to the Hungarian market.

The court’s ruling was related to a case brought by UK online gambling operator Sporting Odds. The operator had previously been found to have provided online gambling services in Hungary without a license from local regulators.

In 2016, the Hungarian Tax Authority detected Sporting Odds’ breach of the country’s gambling regulations and fined the operator €11,150. Sporting Odds brought the matter to the country’s Administrative and Labor Court, requesting an annulment of the tax authority’s fine. The Hungarian court, in turn, turned to CJEU to rule whether the country’s existing regulations for the provision regarding online casinos were in breach of EU regulations.

Under Hungary’s gambling laws, only operators of land-based casinos across the country are able to obtain licenses from local regulators to provide online casino games. CJEU ruled today that that particular provision in the country’s gambling law represents a “radical restriction” of EU treaties for the free movement of services across the EU Member States.

Europe’s top court also pointed out that Hungary’s gambling law discriminated against international online casino operators without a physical presence in the country and prevented them from entering the local market.

Hungarian gambling regulations contain provisions for the organisation of calls for tenders for interested operators. Budapest, however, has not moved to launch a public offering, as noted by the CJEU.

The court further pointed out that a second provision that required operators to be present in the local market for at least a decade, so as to be eligible for a license without having to participate in a call for tender, further disadvantaged international companies.

The CJEU issued a similar ruling in a case involving major online gambling operator Unibet last summer. Unibet had been fined by Hungarian regulators for providing unlicensed gambling services to local players. The operator, in turn, brought the issue to court, arguing that Hungary’s gambling regulatory framework put it at a serious disadvantage to local gambling operators seeking to have the penalty dismissed.

The court also ruled that the Hungarian Tax Authority could not impose fines as the country’s restrictive gambling system was not compatible with treaties for the free provision of services within the European Union.